Hilton Won’t Top New ITT Bid
After waging a bitter nine-month takeover battle for ITT Corp., Hilton Hotels Corp. on Tuesday all but conceded defeat when Chief Executive Stephen Bollenbach said he will not top a rival $13.3-billion bid by Starwood Lodging Trust.
But Hilton’s outlook still looks bright even though a combined ITT-Starwood would become a formidable competitor, many analysts said. Beverly Hills-based Hilton has other growth opportunities, and its third-quarter earnings, released Tuesday, were positive, analysts said.
Hilton said it will submit its existing $70-a-share bid for ITT, which owns the Sheraton hotel chain and Caesars Palace in Las Vegas, to a stockholder vote during the ITT annual meeting Nov. 12. New York-based ITT has already agreed to accept an $82-a-share offer by Starwood, an aggressive real estate investment trust that recently agreed to buy the Westin hotel chain.
“Anything can happen, but this looks like the end of the game,” said Harold Vogel, an analyst at Cowen & Co. “He will not compete on it; he will not chase it.”
In a telephone conference with securities analysts, Bollenbach said: “We don’t intend to make any sort of counteroffer. . . . The reality is the market loves the deal that’s been presented by Starwood Lodging.”
Wall Street investors, who had feared that Hilton might overpay to win control of ITT, breathed a sigh of relief after Bollenbach’s comments. Hilton shares jumped $2 to close at $35 on the New York Stock Exchange, while ITT slipped 44 cents to $75.31 and Starwood gained $1.56 to $59.19.
In response to Bollenbach’s statements, ITT spokesman Jim Gallagher would say only that “we are absolutely thrilled with the deal we announced yesterday. We are very happy to put our company in the hands of Starwood management.”
Assuming ITT shareholders reject Hilton’s offer, they will vote on Starwood’s in late February or early March, Gallagher said.
“This deal is going through with Starwood. It’s going to happen,” said Marvin Roffman, who follows the hotel-casino business as president of Roffman Miller Associates, a Philadelphia-based money manager.
The combination of ITT and Phoenix-based Starwood would create the world’s largest hotelier, bringing about 650 Sheraton, Westin and Caesars hotels and casinos in 70 countries under the control of one corporation. The combined companies would earn more than $10 billion in annual revenue.
Many industry analysts say Hilton’s prospects are good even without ITT. Bollenbach said the company already has some hotel purchases--big and small--in the works. In addition, Hilton’s third-quarter earnings showed that profit and revenue remain strong. Net income during the July-September period shot up about 75% from the same period last year, to $94 million. Third-quarter revenue rose 39% to $1.31 billion.
* RISING STARWOOD: ITT’s likely buyer has come a long way from bankruptcy. D1
